Question

In: Finance

You are investing for retirement starting at age 25. You invest $10,000 per year. During years...

You are investing for retirement starting at age 25. You invest $10,000 per year. During years 1-30 your investments earn 15% per year.   During years 31-40 you move to more conservative estimates earning 5% per year. How much will you have saved when you retire at age 65?   Assume investments occur at the beginning of each year. What is the IRR of this investment stream? (answer is IRR=11.9%) In excel functions

Solutions

Expert Solution

Your Current Age = 25 year

You will retire at 65 year.

So you have total 40 year for saving.

Cumulative value of saving for first 30 year is calculated in excel and screen shot provided below:

Total Cumulative saving for first 30 year is $4,999,569.18.

Now, this value act as present value for next 31- 40 year. So, total saving at time of retirement is calculated in excel and screen shot provided below:

Total saving at time of retirement will be $8,275,839.25.

Now, Internal rate of return is calculated in excel and screen shot provided below:

Internal rate of return is 11.90%.

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

You annually invest $2,000 in an individual retirement account (IRA) starting at the age of 25...
You annually invest $2,000 in an individual retirement account (IRA) starting at the age of 25 and make the contributions for 10 years. Your twin sister does the same starting at age 40 and makes the contributions for 25 years. Both of you earn 7 percent annually on your investment. What amounts will you and your sister have at age 65? Use Appendix A and Appendix C to answer the question. Round your answers to the nearest dollar. Amount on...
You invest $50,000 now and receive $10,000 per year for 15 years starting at the end...
You invest $50,000 now and receive $10,000 per year for 15 years starting at the end of the first year. What is the discounted payback period? Use i = 9% annual rate compounded annually. Give the discounted payback period between two consecutive integers.
1) You invest $50,000 now and receive $10,000 per year for 15 years starting at the...
1) You invest $50,000 now and receive $10,000 per year for 15 years starting at the end of the first year. What is the payback period in whole number years for this investment? In other words, in what year do you break even on this investment? Use i = 9% annual rate compounded annually, and use the discounted payback approach (not Simple Payback).
You plan to retire in year 20 Your retirement will last 25 years starting in year...
You plan to retire in year 20 Your retirement will last 25 years starting in year 21 You want to have $50,000 each year of your retirement. How much would you have to invest each year, starting in one year, for 15 years , to exactly pay for your retirement ,if your investments earn 6.00% APR (compounded annually)?
You plan to retire in year 20 Your retirement will last 25 years starting in year...
You plan to retire in year 20 Your retirement will last 25 years starting in year 21 You want to have $50,000 each year of your retirement. How much would you have to invest each year, starting in one year, for 15 years , to exactly pay for your retirement ,if your investments earn 6.00% APR (compounded annually)? Answers: $21,349 $21,546 $20,930 $20,520
You plan to retire in year 20 Your retirement will last 25 years starting in year...
You plan to retire in year 20 Your retirement will last 25 years starting in year 21 You want to have $50,000 each year of your retirement. How much would you have to invest each year, starting in one year, for 15 years , to exactly pay for your retirement ,if your investments earn 6.00% APR (compounded annually)? a. 21.,349 b. 21, 546 c. 20,520 d. 20,930
Susan saved $5000 per year in her retirement account for 10years (during age 25-35) and...
Susan saved $5000 per year in her retirement account for 10 years (during age 25-35) and then quit saving. However, she did not make any withdrawal until she turned 65 (i.e., 30 years after she stopped saving). Her twin sister, Jane did not save anything during the 1st 10 years (during age 25-30) but saved $5,000 per year for 30 years (during age 35-65). What will be the difference in their retirement account balance at age 65, if their investments...
You annually invest $1,000 in an individual retirement account(IRA) starting at the age of 30...
You annually invest $1,000 in an individual retirement account (IRA) starting at the age of 30 and make the contributions for 15 years. Your twin sister does the same starting at age 45 and makes the contributions for 15 years. Both of you earn 6 percent annually on your investment.What amounts will you and your sister have at age 60? Use Appendix A and Appendix C to answer the question. Round your answers to the nearest dollar.Amount on your account:...
1. You annually invest $1,500 in an individual retirement account (IRA) starting at the age of...
1. You annually invest $1,500 in an individual retirement account (IRA) starting at the age of 20 and make the contributions for 15 years. Your twin sister does the same starting at age 35 and makes the contributions for 30 years. Both of you earn 7 percent annually on your investment. What amounts will you and your sister have at age 65? Round your answers to the nearest dollar. Amount on your account: $   Amount on your sister's account: $  ...
You annually invest $1,500 in an individual retirement account (IRA) starting at the age of 30...
You annually invest $1,500 in an individual retirement account (IRA) starting at the age of 30 and make the contributions for 15 years. Your twin sister does the same starting at age 45 and makes the contributions for 15 years. Both of you earn 7 percent annually on your investment. What amounts will you and your sister have at age 60? Use Appendix A and Appendix C to answer the question. Round your answers to the nearest dollar. Amount on...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT